AI Drafter 
TaxTMI 
TaxTMI 
2018 (8) TMI 1258
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.... 2. Ground No.1 is general which does not require any separate adjudication. 3. Ground Nos.2 to 5 deal with addition on account of transfer pricing adjustment amounting to Rs. 25,74,03,817/-. Briefly stated, the facts of the case are that the assessee is an Indian company engaged in manufacturing and marketing of lubricants in India. It imports different grades of base oil and additives. These base oils are blended with additives to manufacture lubricants for different applications in automotive industry and marine segments. The assessee filed report in Form No. 3CEB declaring ten international transactions. The A.O. referred the matter of determination of arm's length price (ALP) of the international transactions to the Transfer Prici....
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....t of business support services.' This is how, he determined the ALP of 'Information technology services' at Rs. 48 lac and Nil for all the remaining eleven services which resulted into recommending transfer pricing adjustment of Rs. 25,74,03,817/- against the transacted value of Rs. 26,22,03,817/-. The assessee remained unsuccessful before the Dispute Resolution Panel (DRP) on this issue. This led to the making of addition of Rs. 25.74 crore and odd in the final assessment order which has been assailed before the Tribunal. 4. We have heard both the sides and perused the relevant material on record. It is observed that the assessee claimed to have received twelve different services viz., Controllers, Human Resource; Corporate Law; Public ....
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....amounted to duplication of services which did not give any benefit to the assessee. 5. We find that on the 'Benefit test' as applied by the TPO for determining the ALP at Nil in respect of eleven services and Rs. 48.00 lac in respect of the service of 'Information technology', the Hon'ble Punjab & Haryana High Court in Knorr-Bremse India P. Ltd. vs. ACIT (2016) 380 ITR 307 (P&H) has held that the question whether a transaction is at an arm's length price or not is not dependent on whether the transaction results in an increase in the assessee's profit. A view to the contrary would then raise a question as to the extent of profitability necessary for an assessee to establish that the transaction was at an arm's length price. A further que....
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....as per the mandate of rule 10B(1)(a)(i). Not even a single comparable case has been brought on record to facilitate a comparison between the price for the services availed by the assessee vis-à-vis that paid by other comparables in similar circumstances. 7. Even otherwise, we notice that the action of the TPO in determining Nil ALP of the eleven services and Rs. 48.00 lac of Information technology on the ground that no such services were required to be availed or it was a case of duplication of services or shareholders' services and then the AO making addition simply on the basis of recommendation of the TPO, is not in accordance with the judgment of the Hon'ble jurisdictional High Court in CIT v. Cushman & Wakefield (India) (P.) ....
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....aken ALP of these international transaction at Rs. 48.00 lac on the basis of recommendation of the TPO without carrying out any independent investigation in terms of the deductibility or otherwise of such payment in terms of section 37(1) of the Act. The addition has been made by the AO in his final assessment order giving effect to the direction given by the DRP and not by invoking section 37(1) of the Act. As per the ratio decidendi of Cushman & Wakefield India (P.) Ltd. (supra), the TPO was required to simply determine the ALP of the international transaction, unconcerned with the fact, if any benefit accrued to the assessee and thereafter, it was for the AO to decide the deductibility of this amount u/s 37(1) of the Act. As the TPO in t....
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....Service Tax and Value Added Tax. The DRP has decided this issue in the assessee's favour vide para 3.2 of its direction given in rectification proceedings. The A.O. is directed to give effect to such directions, which the ld. AR states has not been done so far. 10. Ground No.7 is against the disallowance of interest on payment of advance tax amounting to Rs. 8,86,431/-. This issue has also been dealt with by the DRP by holding that no deduction can be allowed in respect of interest paid for payment of advance tax. It goes without saying that the decision taken by the DRP is unimpeachable as has also been conceded by the ld. AR that the payment of such interest cannot be allowed. The ld. AR, however, submitted that the deduction on accoun....